Moody’s: insurance market is not out of the woods yet

Insurers may have survived the worst of the financial crisis without any major players going under, but the future is still far from bright.

That's the view of top rating agency Moody's, which says the market remains stagnant and that profits are unlikely to recover any time soon.

At one point during the banking collapse some observers were predicting the insurance sector would be next to fail. Shares of the large companies got hammered. At one point Aviva saw its stock lose 50% over two days. Since then sentiment has shifted, with insurers' exposure to bank bonds deemed not to be overly problematic.

But Moody's is advising caution. "The fundamental credit outlook for the UK life insurance system remains negative," it says.

"Despite recent improvements in investment markets, the rating agency expects continuing pressure on premiums and profitabilitywith significant challenges from the implementation of regulatory changes in 2012."